"You can learn more from mistakes than you can from successes," says Guy Kawasaki, CEO and founder of venture capital investment bank Garage.com. "Oftentimes success is just based on blind dumb luck Where's the lesson in that?"

The panel on stage bobbed in symmetric agreement. They should know. Kawasaki handpicked each one based on their years of valued experience and occasional monumental episodes of egregious error when dealing with growing companies for the "Oops: Startup Stories You Won't Believe" session late yesterday, part of the first day of Garage.com's tenth "Bootcamp for Startups."

What's the biggest mistake startups often make? According to the panel, almost all of them stem from the way a company deals with people, both within and around a startup's market.

Steven Baloff, General Partner at venture capital firm Advanced Technology Ventures, says the biggest mistake he made early in his career was worrying too much about his competition, while failing to listen to the wants and needs of his customers.

"You definitely need to reverse that," he says.

And it isn't just the company-to-customer relationship that's important, reminds Jim Creigh, VP of Legal and Government Affairs at Garage.com. There's also the little deal of the several million you just snagged from the venture capital firm.

"The relationship between the entrepreneur and the firm is ongoing," says Creigh. "The process is like getting married. If things go soft, the VCs will be very unforgiving if you've been aggressive up front."

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They won't, however, necessarily be unforgiving if you fail with somebody else's money. Kamran Elahian, a multi-millionaire and successful entrepreneur, was on the fast track to seemingly limitless success until he founded his third company, Momenta, in 1992. The pen computing play evolved into what some call the biggest startup failure of all time, burning through $40 million in funding before finally closing its doors less than a year later,

But VCs, it turns out, like entrepreneurs who've handled their share of flops, because, says Elahian, it's a great opportunity to learn from your mistakes. Elahian has apparently learned well, going on to found several very successful companies since the Momenta disaster, including PlanetWeb, Centillium, and NeoMagic.

"When you fail miserably, as I have, it's not easy to always figure out what the problems were," he says. "After you get over denial and anger you look back and you realize that you just took too many risks. The key is you show that you've gained something from that failure."

This is not to imply startups should not take risks, says Nicholas Hall, founder of Starupfailures.com, a community resource for, you guessed it, startup failures. There will always be risks involved in any venture, he says. The key is to avoid spreading yourself too thin.

"Take careful note if you're hiring people in industries you've never worked with," he says. "The technology risk is a given, but make sure the market for that technology is established. All too often I see companies developing a product for an unproven market."

The panel all agreed that these three risks sectors (people, technology and market) are interrelated, but each came back to the people issue as perhaps the most vital.

"My whole VC fund is about people," says Kevin Fong, Managing Partner at the Mayfield Fund. "When you invest you make relationships that last a long time, and regardless of their success the first time around those relationships will go on and do better things if you maintain them."

Just don't maintain them too long, advises Elahian.

"The stupidest thing I ever did was not fire someone who I needed to fire," he says. "You might think you're doing them a favor, but you're not. You both end up suffering, and the company suffers as well."

Slightly red-faced, he recounts an episode at Momenta when the company received an order for 10,000 computers from various retail outlets throughout the country. Thanks to an error by a VP Elahian had been trying to fire for months, 10,000 computer manuals, rather than the computers themselves, were overnighted from the publishing house in Singapore. The bill was several hundred thousand dollars.

"It doesn't matter who screwed up," add Elahian, "because the buck stops at the CEO."

Garage.com's camp ends today.